Although both parties have since denied reports of a sale, the question remains: Will a merger be legal?

Two scenarios

During a press briefing, Gozon remarked that he didn’t see anything the matter with it. He explained two things could happen—a merger or a consolidation— if a sale pushed through:

“In a consolidation, only one company survives. In a merger, unless the plan calls for the dissolution of a merging company, the merging companies continue to exist.”

Two companies can have one set of officers, he noted. “We are doing that now with GMA News TV. In certain positions, GMA News TV has its own officers, but when it comes to other top posts, there’s only one set of officials. It saves a lot of money.”

A merger of the two networks isn’t unconstitutional, either, said Gozon, a lawyer by profession.

“I don’t think that the anti-monopoly issue will be raised here,” he said. “Luckily, ABS-CBN is still a strong competitor. That was what happened with (telecommunications company) Globe (which lodged a protest against the acquisition of Sun by Pangilinan’s Smart).”

Good second Should the merger of GMA 7 and TV5 push through, Gozon added, “ABS-CBN will be a good second… unlike years before when GMA 7 was a poor second. But we eventually caught up with them.”

In 2002, he recalled, GMA 7 signed a memorandum of agreement selling the network to Media Quest a company owned by Pangilinan (and which now runs TV5).

Other companies have since expressed interest in GMA 7, he said. “But GMA 7 has grown remarkably since 2002. The price given to Media Quest at the time was only a fraction of the network’s worth now.”

Another view

The Inquirer consulted another lawyer on the issue.

Gerely Rico, senior associate in Alonso and Associates and writer for the show “Legal Forum” on GMA News TV, shared her expert view.

She cited the Constitution in explaining the issue of monopoly: “Section 19, Article XII… states, ‘The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.’”

She invoked a Supreme Court decision, Garcia vs. Executive Secretary (GR No. 157584, April 2, 2009), which pointed out: “[The] Constitutional provision does not declare an outright prohibition of monopolies. It simply allows the State to act ‘when public interest so requires.’”

More vital

The decision noted: “Two elements must concur before a monopoly may be regulated or prohibited: There in fact exists a monopoly… and public interest requires its regulation and prohibition.”

In sum: “Questions of what public interest requires and what the State reaction shall be… [necessitate] the exercise of discretion on the part of the State.”

The more vital question seems to be: Will a monopoly result from the purported merger of TV5 and GMA 7?

Government agency

Alonso said: “In the case of a merger between TV5 and GMA 7… for as long [as] the merger is not intended to dominate the industry where they belong… to exclude actual or potential competitors from the field, there is no monopoly that might be considered as unconstitutional.”

She stressed, however, that any merger of networks “should comply with any condition that may be imposed by the National Telecommunications

Commission (NTC) in order for the merger to be valid.”

Alonso further explained, “[The NTC is] the government regulatory agency that has jurisdiction over the broadcast industry. All plans for mergers of corporations within said industry must be approved by the NTC, subject to its existing rules and regulations.”